K3 Business Technology Group Regulatory News (KBT)

KBT

29 June 2010

K3 Business Technology Group plc

("K3" or "the Group")

Announces

Acquisition of Pebblestone IP

K3, which provides Enterprise Resource Planning ("ERP") solutions to the supply chain industry, is pleased to announce that it has agreed terms to acquire the Intellectual Property ("IP"), international sales channel and customers (together "Pebblestone IP") from the Pebblestone Group, the developer of Microsoft-based ERP software modules for the fashion industry, for an initial consideration of €850,000 (£700,000). The acquisition follows K3's purchase in March 2010 of the trade and certain assets of Pebblestone Netherlands, a major distributor of Pebblestone IP software modules.

Pebblestone IP comprises a range of specialist software modules designed to enrich the functionality and performance of Microsoft Dynamics ERP solutions for fashion wholesalers and garment manufacturers. This enhanced Microsoft Dynamics ERP solution is widely acknowledged within the fashion industry as being a market leader. Approximately 33 distributors across 20 countries currently resell this solution and support some 300 customers.

The acquisition strengthens K3's presence in Europe and adds to K3's growing library of IP, which enables the Group both to obtain significant margin benefit and deliver an enhanced offering. K3 intends to integrate Pebblestone IP within its existing retail software operations in Holland.

For the year to 31 December 2009, Pebblestone IP generated revenues of €900,000 (£740,000) and a profit before tax of €225,000 (£185,000).

The initial consideration of €850,000 for the acquisition is payable in cash and a deferred consideration of up to €400,000 is due in 2011, dependent on Pebblestone IP's outperformance over 2009 levels.

 Andy Makeham, Chief Executive of K3, commented,

"We are delighted to have acquired the IP, international distribution channel and customers of the Pebblestone Group. This acquisition is a natural and attractive addition to Pebblestone Netherlands, the Dutch distributor of fashion software which we acquired in March.

Pebblestone IP enhances the Microsoft Dynamics ERP software suite and provides a compelling solution for the fashion industry. Our ownership of the intellectual property will enhance our margins and bring a useful new income stream from licencees. It also supports our plans to expand in Western Europe."

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